This document summarizes the results of a study on the use of retail scorecards by 65 retailers and suppliers. Key findings include: 1. Scorecards have primarily improved on-time shipping performance but have more potential to impact assortment and costs. Both parties see opportunities for improvement that are not yet realized. 2. Retailers and suppliers have different needs and perspectives in using scorecards. Greater alignment is needed to improve areas like assortment. 3. Data sharing practices are still developing, with room for retailers to share more useful data like point-of-sale and inventory data. 4. Scorecards currently focus more on penalties than incentives, though a balanced approach could drive better

1. What Is the Value of
a Retail Scorecard?
Results from a Quantitative Study of 65 Retailers and Suppliers
10/21/2014
By Lora Cecere
Founder and CEO
Supply Chain Insights LLC

2. Contents
Page 2
Disclosure
Research
Research Methodology and Overview
Executive Overview
Using Retail Scorecards to Improve Performance
Understanding the Players
How Suppliers Use Scorecards
How Retailers Share Data
The Use of Scorecards in Reward Systems
Advice for the Retailer
Advice for the Supplier
Summary
Appendix: Demographic Data
About Supply Chain Insights
About RVCF
About the Author
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Disclosure
Your trust is important to us. As such, we are open and transparent about our financial relationships
and our research processes. This independent research was jointly conducted by Supply Chain
Insights in partnership with the Retail Value Chain Confederation (RVCF) during 2014.
Research
Supply Chain Insights LLC is dedicated to bringing thought-leading research to the supply chain
leader. This report is designed to guide your decision making in defining and executing scorecards
between retailers and suppliers. Please share this data freely within your company and across your
industry. All we ask for in return is attribution when you use the materials in this report. We publish
under the Creative Commons License Attribution-Noncommercial-Share Alike 3.0 United States and
you will find our citation policy here.
Research Methodology and Overview
This report is based on responses from 65 supply chain leaders from a quantitative study fielded
through a web-based survey during January through June of 2014. While the detailed demographics
are shared in the Appendix of this report, an overview of the study is shared in Figure 1.
Figure 1. Overview of Retail Scorecard Study

4. To guide the reader and ensure clarity in reading this report, here we start with some definitions:
Collaboration: In this report, the definition of collaboration is the establishment of practices that are
win/win for both the supplier and the retailer. This is quite different than collaborative data sharing
where trading partners agree to share data but, the data is not connected to win/win practices where
both the retailer and the supplier see value.
Demand-Driven: The term demand-driven in this report is defined as the use of demand data
(channel data of point of sale, warehouse retail withdrawal data, perpetual inventory information and
loyalty data) to better sense, shape and translate demand with zero latency.
Retail Scorecards: In this survey, this term was defined as a set of key performance indicators that
are used to track the progress between a buyer and a seller in terms of the health of the relationship,
specifically where the retailer evaluates the supplier.
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Executive Overview
Retail scorecards are now more than a decade old. The companies in this study had an average of
more than five years of experience using retail scorecards. Buyers and suppliers now manage
multiple scorecards simultaneously (in the same relationship) in trading partner communications. The
most common scorecards are focused in the areas of supply chain.
As with any relationship, there is always a carrot and a stick. A carrot, or an incentive to do better, is a
positive reward system given to affirm good behavior; while a stick is a punitive action for an
unwanted behavior. Today, in the administration of retail scorecards, they are more focused on
deductions and the withholding of payment.
The primary value of the retail scorecard is the improvement of on-time and in-full shipments. Both
parties have the opportunity to use the scorecard to improve assortment and reduce total costs.
Today, these opportunities are aspirational. Here we share the insights from the study and end with
recommendations for both trading partners.

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Using Retail Scorecards to Improve
Performance
After a decade of implementation and use, the primary value of the retail scorecard is the
improvement of on-time shipping performance. The scorecard has opened up dialogues between
retailers and suppliers to facilitate the movement of goods in-time and in-full to expectations. This
benefit, while not trivial, is only the beginning of what could be possible through the use of retail
scorecards. The overview of the current and potential value proposition—a contrast of importance
and performance of retail scorecards—is shown in Figure 2.
Figure 2. Importance versus Performance of Retail Scorecards

7. To understand the potential, let’s take a closer look at the impact on on-time delivery. In the evolution
of retail scorecards, on-time deliveries lacked a common definition with each retailer setting a
different expectation of the meaning of “on-time.” As a result, the scorecard improved trading partner
communication to improve the perfect order. The scorecard enabled productive dialogue for trading
partners to align on a critical element of business pain.
While the greatest benefit of scorecards was in the improvement of the perfect order (a shipment that
is on-time, in-full and accurate), the promise could be much, much more. Since the focus has been on
logistics and the perfect order, the scorecard has had little impact on assortment or total costs.
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Understanding the Players
Retailers and suppliers come to the table to trade from different backgrounds with dissimilar needs
and very different political dynamics. The retailer is typically a smaller company with a regional focus.
Retail, and the merchandising of goods, is a combination of both art and science. Within the retailer,
there is tension between the buyer/ merchandiser and the retailer’s supply chain organization and
store operations. The role of the store is changing with the greater acceptance of e-commerce and
mobile commerce by the consumer.
The retailer’s supply chain systems are not as advanced as those of their suppliers. In general, they
have been later adopters of technology. For example, in this study 56% of retailers have a Perpetual
Inventory (PI) signal in their warehouses with 47% having a PI signal for their stores. Managing
inventory on a perpetual basis is a sign of supply chain maturity and an important foundation for
retail/supplier collaboration.
The supplier interaction with retail usually starts with a call from a salesperson. The larger the
supplier’s company, the larger and more complex the sales team, and the greater the political
dynamic between the supplier’s sales group and other functions within the supplier’s organization—
marketing, demand insights, category management and customer service.
In larger and more significant accounts, like Walmart or Target, the sales group becomes a sales
team focused on selling to the retailer. These teams can range from a small team of two to five
people calling on a local retailer, to a team of hundreds calling on Walmart for a major consumer
products company. A struggle for the retailer is the difference in scale and capability of the suppliers’
organization. Each supplier has a different definition of regional/global governance, and the supplier

8. account team often has to fight within their own company to get support for the retailer relationship
that they support. As a result, getting the right attention to improve retail scorecards is not easy. The
typical organizational structure of a supplier’s organization is shown in Figures 3a and 3b.
The depiction in Figure 3a is an overview of a manufacturing organization attempting to implement
demand-driven processes. In these attempts to better use demand data, the supplier’s organization is
implementing technologies and processes to improve demand sensing and translation. This includes
push/pull decoupling points and the use of advanced analytics.
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Figure 3a. The Supplier’s Organization and Demand-Driven Processes
While it sounds easy, managing demand and translating retailer needs within the supplier is a
challenge. The average supplier is greater than $5 billion in revenue operating over 50 manufacturing
locations and 28 distribution centers. Consumer packaged goods and consumer durable companies
tend to be more global, while food and beverage companies tend to be more regional.

9. The depiction in Figure 3b is an overview of the regional sales account team structure. While a
regional team may have 30 to 50 account teams, each with scorecards, the global consumer
packaged goods companies have hundreds of account teams with scorecards. As a result, the
supplier’s organization struggles to harmonize and standardize information across a myriad of
retailers that each has a very different scorecard with different definitions and formats. While it is the
intent of the supplier to use customer scorecards, no supplier feels that they do it well.
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Figure 3b. The Supplier’s Organization - Regional Sales Structure
The focus of the scorecard activity changes slightly by type of trading partner. While both retailer and
supplier are aligned on the importance of scorecards to improve the perfect order, they are not
aligned on the other dimensions of scorecard performance. The work to date is the tip of the iceberg.
As shown in Figure 4, there is much more to be done. The key to success is alignment. For example,
the retailer is more interested in improving assortment and the supplier is more focused on the
management of deductions. Since scorecards have not been made a part of buying decisions,
progress is slow. If scorecards were more of a carrot than a stick, the progress would be faster.

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Figure 4. A Contrast of Retailer and Supplier: Importance versus Performance of Retail Scorecards
How Suppliers Use Scorecards
The majority of suppliers share scorecard information cross-functionally within their organization with
at least five internal groups. While the groups may vary, as shown in Figure 5, the average
manufacturing company is attempting to share this data cross-functionally.
The most significant dialogue is face-to-face between a supplier and a retailer. The majority of
suppliers meets with their primary retail relationship 16 times a year, and hosts cross-functional
meetings within their own organizations to heighten the awareness of retail feedback.

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Figure 5. Sharing of Retail Scorecards within the Supplier’s Organization
How Retailers Share Data
Scorecard interpretation is a data-driven activity for both the retailer and the supplier. To drive
improvements, both parties have to understand the root causes and the trends. This requires data
analysis and analytics.
As can be seen in Figures 6 and 7, the primary sharing of data by the retailer is via a portal with a
focus on sharing the retail forecast. Unfortunately, the portal is one of the most ineffective ways to
share data, and the retail forecast is less important to the supplier than warehouse withdrawal data
and the perpetual inventory signal. A more effective method of data sharing for the supplier is the use
of retail private networks.

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Figure 6. Data Sharing by Retailers
Figure 7. Methods of Data Sharing by the Retailer

13. While the retailer has more power in the channel than the supplier, they are behind the supplier in
sharing of data and building effective value networks. It is also ironic that the most common data
shared by the retailer is often the least useful, i.e. the forecast error of the retailer is just too high for
forecast data sharing to be meaningful. A greater value for the supplier occurs when the retailer
shares actual take-away from the store via point of sale purchases. The second most valuable data
element is warehouse perpetual inventory (PI) levels. The lack of a good, and more widespread,
capability for perpetual inventory is a barrier to retailer and supplier collaboration.
The Use of Scorecards in Reward Systems
Most scorecard interactions today are more focused on the “stick” or penalties, than the “carrot” or
joint benefits for a collaborative relationship. As shown in Figure 8, there is a strong emphasis is on
deductions.
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Figure 8. Scorecard Reward Systems
The retailer normally budgets deductions and manages them as a cost of doing business.

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Figure 9. Retailer Budgeting Processes for Deductions
Advice for the Retailer
As the brick-and-mortar retailer is attacked by e-commerce pure plays—Amazon in North America,
Alibaba in China, and Flipkart in India—assortment and excitement in the store become paramount to
lure customers. There is a need for the supplier to drive more excitement in the store. Based on what
is happening in the industry, and the need to drive excitement and assortment in the store, there are
three recommendations:
1. Share Data Freely and Openly through a Private Network. Today, as shown in Figure 7, most
retail data is shared through a portal. The most effective way to share data is through a private
network. Portals do not enable effective data sharing and the support of collaborative practices. When
data is shared through a portal it lacks persistence: there is no common system of record.
2. Focus on Clean Data. Replenishment is fueled by an effective perpetual inventory signal. It
anchors optimization engines for replenishment. The supply chain needs it. Without a perpetual
inventory signal, the retailer will not be able to manage out-of-stocks and promotions. Today, there
needs to be an accurate signal reflecting real-time changes as orders are shipped throughout the

15. day. So, to be a collaborative trading partner, build a good perpetual inventory signal. There is no
substitute for an accurate PI signal in supply chain excellence.
Additionally, get good at forecasting. Measure the Mean Absolute Percentage Error (MAPE) of your
forecast and focus on driving improvement. Today there are only two retailers that have forecast
accuracy that is good enough to drive value downstream for trading partners. Drive a difference. Own
your data.
3. Take Your Hand Out of the Supplier's Pocket. For many, deductions and penalties for
performance have become a budget line-item (often a profit center). And 84% of retailers charge for
deductions with 1/3 of retailers having a budget for deductions with many taking them into income. As
a result, it has become a systemic way of making money for the retailer which is a lose/lose situation.
In this relationship no one wins. Suppliers cannot get to the root cause to solve problems, and
revenue recognition is delayed. Instead, it becomes waste, or Muda, in the supply chain to track and
manually audit. Instead, focus on clean transactions. Carrots drive better performance than sticks.
Advice for the Supplier
Focus on bringing value and excitement to the retailer through assortment and sharing of demand
insights to drive lift. Realize that we are very early in the development and execution of retail
scorecards and help retailers understand how scorecard measurements tie to the metrics that
matter—basket size, inventory turns, and net sales—to drive maturity. Here are three
recommendations:
1. Use Retailer Data. While data sharing practices today are not perfect, they are a start. Redesign
supply chain processes to use data outside-in to better sense and shape demand and improve the
response of replenishment to retailers.
2. Give Retailers a Reason to Share Clean Data. Use retailers’ data to identify new opportunities;
possibilities are collaborative logistics, inventory reductions, improved shelf assortment and
specialized offers. Use network design and inventory technologies to unearth new opportunities.
3. Pay for Performance. Actively monitor deductions and ask for a detailed accounting of deduction
types. Where possible, tie promotion performance to incentives to try to focus more on the carrot than
the stick.
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Summary
Retail scorecards are fundamental to retailer and supplier collaboration. They help to bridge the gap
between partners and forge unique value. Today, the relationships and the use of scorecards are
maturing. While the impact has been great in improving on-time shipments, it is only the tip of the
iceberg.

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Appendix: Demographic Data
In this section, we share the demographic information of survey respondents and additional charts
referenced in the report to substantiate the research findings.
The participants in this research answered the surveys of their own free will. There was no exchange
of currency to drive an improved response rate. The primary incentive made to stimulate the
response was an offer to discuss the survey results in the form of Open Content research sharing at
the end of the study. Each participant was offered an hour call to discuss the findings at the end of
the survey.
The names, both of individual respondents and companies participating in this study, are held in
confidence. It is our policy to never share the names of the respondents or the identity of the
companies where they work.
The demographics are shared to help the readers of this report gain a better perspective on the
results. The demographics and additional charts are found in Figures A–L.
In summary, the average respondent’s company had slightly more than five years of experience in
the use of retail scorecards, and the participants were almost equally divided between retailer and
supplier. The average respondent does not work with just one scorecard; instead, it is two to three.
The most common are supply chain, customer service and finance/accounting.

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Figure A. Survey Respondent Overview: Type of Company and Revenue
Figure B. Respondent Demographics: Experience with Retail Scorecards

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Figure C. Respondent by Role
Figure D. Type of Scorecards

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Figure E. Types of Scorecards Used by Suppliers vs. Retailers
Figure F. Connection between Scorecards and Face-to-Face Review

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Figure G. Criteria for Face-to-Face Meetings
Figure H. Product Category for Primary Relationship

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Figure I. Number of Retailers Having an e-Commerce Presence
Figure J. Types of Perpetual Inventory Signals

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Figure K. Primary Relationship Elements
Figure L. Top Three Impactful Elements

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About Supply Chain Insights, LLC
Founded in February, 2012 by Lora Cecere, Supply Chain Insights LLC is focused on delivering
independent, actionable, and objective advice for supply chain leaders. If you need to know
which practices and technologies make the biggest difference to corporate performance, turn to us.
As a company dedicated to supply chain research, we focus on sharing insights on supply chain
trends, evolving technologies and the relationship between supply chain excellence and corporate
performance. For more information visit www.supplychaininsights.com.
About RVCF
Driving Continuous Innovation, Collaboration and Perfect Execution
RVCF promotes best practices, trading partner alignment, collaboration, and technology solutions to
streamline operations, lower costs and speed goods to market throughout the retail value chain. For
more information, visit www.rvcf.com.
About the Author Lora Cecere
Lora Cecere (twitter ID @lcecere) is the Founder of Supply Chain Insights LLC and
the author of popular enterprise software blog Supply Chain Shaman currently read
by 6,000 supply chain professionals. She also writes as a LinkedIn Influencer and
is a contributor for Forbes. Her book, Bricks Matter, (co-authored with Charlie
Chase) published on December 26th, 2012. She is currently working on two new
books, Metrics That Matter and The Shaman’s Journal to publish in Q4 2014.
With over ten years as a research analyst with AMR Research, Altimeter Group, and Gartner
Group and now as a Founder of Supply Chain Insights, Lora understands supply chain. She has
worked with over 600 companies on their supply chain strategy and speaks at over 50 conferences a
year on the evolution of supply chain processes and technologies. Her research is designed for the
early adopter seeking first mover advantage.